Findings and Observations on TOR Nos. G, H and I

in Category Terms of Reference No. G, Terms of Reference No. H, Terms of Reference No. I


(i) Does an official policy exist for the fair and equitable allocation of Government-controlled advertising to advertising agencies and media?
(ii) If such a policy does exist, does the actual implementation of the policy suffer from concealed manipulation to favour particular advertising agencies and media?
(iii) Is there scope for public money to be used arbitrarily (and, possibly also secretly) to favour particular channels, journalists or media houses?

2. With regard to the first question: the response is: “Yes” there does exist a set of written, defined procedures, criteria, documentation requirements and guidelines which, taken together, may be described as a “transparent, duly approved, bona fide Government advertisement policy”.
3. In its written submissions to the Commission, the Ministry of Information & Broadcasting has provided a section specifically regarding TOR No.G. This section (at Annexure-14) cites reference to Chapter-I of the Common Services Manual, 1997 issued by the Cabinet Division and the Rules of Business, 1973 (Schedule — II : Entry-17 : Provision-6) as being the applicable Instructions and Regulations of the Federal Government to conduct the advertisement disbursement operations by the Press Information Department of the Ministry of Information & Broadcasting.
4. It is stated that the origins of the advertisement policy practiced by Government exists in a decision taken by the Cabinet in 1950, subsequently amended and ratified by various Governments in 1964, 1966, 1980, 1983 and 2003. In essence, no individual Government functionary has the authority to make payment directly or indirectly to any media house or publication or to any individual journalist. Nor is any such individual Government functionary authorized to buy advertising space directly
5. Six aspects of the policy are identified as follows:
(a) All public sector advertisements are released through the channel of APNS accredited advertising agencies.
(b) The advertising agencies are selected on the basis of open and transparent competition by the selection committees comprising the representatives of the sponsoring department, PID and an external expert.
(c) After release of advertisements, advertising agencies submit their claims along with “tear-sheets” to PID, which are verified/scrutinized according to the approved Government rates and specifications given in the sponsoring department’s requisition letter and the Departmental Release Order (DRO) issued by PID to the advertising agencies.
(d) The verified advertisement bills are forwarded to the sponsoring department for issuance of sanction letters in case of those departments whose budget is under AGPR’s pre-audit control.
(e) After getting the necessary sanction letter from the sponsoring departments, the bill, along with the sanction letter is submitted to AGPR by PID for issuance of pre-audit cheque in the name of the advertising agency which consequently makes payment to the publications
(f) The advertisement bills of non-AGPR Departments/Organizations after necessary security & verification are forwarded to the concerned departments for arranging payments directly to the advertising agencies, and payment is subsequently made to the newspapers.
6. The Commission noted the experience and views of the stakeholders involved in the six aspects listed above. Such stakeholders comprise the Ministry of Information & Broadcasting (through ABC, PID, Internal Publicity Wing, etc.) : advertisers from the Government-controlled sector e.g. PIA, PSO, Benazir Income Support Programme, advertising agencies represented by the Advertising Association of Pakistan (AAP) through both its central, Karachi-based office-bearers as well as its Islamabad-based members which predominantly deal with the Government as distinct from the Karachi-based members whose principal dealings are with the private sector, All-Pakistan Newspapers Society (APNS) representing the newspapers and magazines which publish Government-controlled advertising, Pakistan Broadcasters’ Association whose members own the TV channels and FM Radio stations that telecast and broadcast Government-controlled advertising, Independent Media Corporation (Pvt) Limited, civil society organizations such as the Human Rights Commission of Pakistan and individual civil society activists in media with a special interest in such issues.
Written statements by some of the above stakeholders as provided to the Commission are placed collectively at Annexure-15.
Views expressed by the non-official stakeholders regarding the six elements of the existing policy for allocation of Government-controlled advertising need to be noted.
With regard to element (a) i.e. “All public sector advertisements are released through the channel of APNS-accredited advertising agencies” there is general acceptance of the validity of this criterion because advertising agencies accredited with the All-Pakistan Newspapers Society are required to possess factors of institutional stability, accountability to law and official entities and, therefore, have more credibility than non-accredited advertising agencies. However, the powers and controls exercised by APNS over accreditation, suspension and cancellation of accreditation are the source of some concerns in respect of making APNS a cartel-type body that concentrates excessive powers to itself to the detriment of the interests of advertising agencies and advertisers. For example, advertising agencies which do not receive payments on schedule from their clients for onward payment to APNS member publications are liable for suspension by APNS and several such cases occur frequently. Even though APNS does strive to demonstrate appreciation for such periodic difficulties faced by advertising agencies, it is fairly widely held in the advertising agencies sector that APNS uses the accreditation status in ways that are unfair to advertising agencies. Be that as it may, in the specific context of APNS accreditation of advertising agencies being an essential requirement to be selected for placement of Government controlled advertising works as a positive factor to ensure minimal, credible eligibility.
8. With regard to element (b) i.e. “The advertising agencies are selected on the basis of open and transparent competition by the selection committees comprising the representatives of sponsoring department, PID and an external expert” It is the view of many advertising agencies that this element of the policy is often subverted by careful, deliberate, covert manipulation and subterfuge. For instance, even though all eligible advertising agencies are invited to compete for a particular contract, the actual ultimate beneficiary is already predetermined due to corrupt practices. Thus, everyone involved from the decision-making side, goes through the motions of reviewing all proposals and bids received. The covertly pre-selected agency is chosen on the basis of evaluation slanted in its favour. Or, a relatively short notice period is given to eligible agencies to prepare their proposals while the covertly selected agency is given confidential advance notice and enabled to prepare more effectively than those agencies given a short period for preparation. Or/and, the composition of the selection committee is rigged in a manner that favours a pre-selected advertising agency. The basis for pre-selection of the favored agency is the prevalence of corruption by which the favored agency either pays cash up front in advance to the corrupt decision-makers and recovers its investment later after securing the contract, release of advertisements, submission of invoices, obtaining payments etc.
9. With regard to elements (c), (d), (e) & (f): these aspects of the policy are purely functional and operational by which the proof of advertising having been printed, documented invoices, verification and ultimately payment is obtained. The scope for discretion is extremely limited. Yet, several advertising agencies hold the view that, even when they have to simply obtain cheques legitimately owed to them for completely verified advertising and with invoices exactly as per specifications, bribes and other inducements have to be paid at offices such as PID, AGPR etc. to obtain cheques.
10. A non-policy-related but major problem faced by advertising agencies and media is caused by the tendency of Government entities to authorized release of advertising to media without being able to make payments for such advertising as per the time-frame required by media. Enormous sums of arrears accumulate causing disruption and losses to advertising agencies and media. PID has proposed to all Government entities that they inform PID in advance at the start of each financial year with regard to the actual budgets available with each Government entity for the purpose of advertising. Such advance information in the possession of PID will prevent over-authorization of advertising expenditure and prevent damage being suffered by advertising agencies and media. However, this proposal is not documented as part of the official policy.
11. There is a second facet to the existing policy for allocation of Government controlled policy. This second facet relates to the selection of newspapers and periodicals, as is indicated by TOR No.H i.e. the need for a single, transparent and fair policy for the selection of the media.
12. In the written submissions to the Commission by the Ministry of Information & Broadcasting, this aspect is addressed in the document already placed at Annexure-1 5 under the title of: “Allocation of Government Advertisements”. It is stated that the aims and objectives of the policy by which the print media are selected is based on the Cabinet decision taken in 1950 and subsequently ratified from time to time up to 2003 are:
(i) Judicious and transparent disbursement of Government advertisements to newspapers and journals;
(ii) To protect and promote the interest of the regional Papers;
(iii) To safeguard the interests of the Government Departments/Organizations;
(iv) To apply a uniform policy for Federal and Provincial Governments.
13. In the ten elements that are then listed as the steps by which the above four objectives are achieved; the fundamental determinant becomes the certification of circulation of newspapers and magazines conducted by the Audit Bureau of Circulation which is part of the Ministry of Information & Broadcasting.
14. As stated earlier, in this Part-Two of the Report in the section titled:
“Summary by the Commission of Arguments for Perspective Two” regarding TOR No.A, there are ample grounds to restructure the Audit Bureau of Circulation (ABC) in order to make certification a credible benchmark for both advertisers and advertising agencies. Options are specified in that section of this Report and need not be repeated at this stage. Suffice it here to say that as long as ABC continues to function as an entity entirely controlled by the Ministry of Information & Broadcasting, there is no possibility of ensuring that TOR No.H can be achieved i.e. a single, transparent, objective, non-discriminatory policy for allocation of Government advertisements for placement in print media.
15. Another significant factor which makes the selection of print media unreliable in part is the mushroom growth in recent years of newspapers and magazines which are termed “dummy” publications. As it is extremely easy to launch a publication, it is widely known amongst stakeholders that friends and allies of several persons of influence as well as individuals with dubious credentials have become editors and publishers of newspapers and magazines. Using corrupt practices, such dummy publications obtain certificates from ABC of inflated circulation to become eligible for receipt of Government-controlled advertising. While the major newspapers and media groups tend to remain the principal recipients of Government-controlled advertising — except for periods when they are deliberately allocated low quotas — dummy publications benefit from unduly substantial allocations.
16. It is also stated by some stakeholders that, to benefit from the element of the policy by which 25% of the expenditure on buying space .has to go to the regional Press, several dummy publications become unfair recipients of Government advertising. They misuse the fact of being located in smaller cities and towns to obtain undue material benefits from the public exchequer. Whereas representatives of the regional Press claim that, because they cater to the precise needs and problems of their local communities, they enjoy levels of circulation and readership which make them fully eligible to receive the25% quota. In their view, the major newspapers, despite some of them have editions published from or circulated in smaller cities or towns do not do justice to the needs of local communities. Such contrary claims for and against the regional Press and allegations about the large number of dummy publications can only be effectively resolved by an independent, professionally reputed ABC.
17. With regard to the second part of TOR No.G: as per verbal statements made to the Commission, despite the existence of an allocation policy on paper, the actual allocation of contracts to advertising agencies and print media in several cases, have been made arbitrarily and unfairly.
18. One particular advertising agency by the name of Midas (Pvt) Limited is alleged to have been the principal beneficiary of such unfair and discriminatory selection to handle a large number of Government advertising contracts. Detractors of this company go to the extent of claiming that so well entrenched is the influence of this particular firm that it is even able to arrange for the posting at PID of officials who will “cooperate” with it in order to benefit the firm.
For its part, the Chief Executive of Midas (Pvt) Limited states that allegations arise from professional jealousy of rival agencies or from sources that have hostile relations with particular Government functionaries or with a specific political party or parties in the Federal or Provincial Governments. The father of the CEO of Midas (Pvt) Limited who is the original founder of the Midas group states that he has no business relationship with his sons’ enterprises and that he now devotes most of his time to writing and journalism even as he continues to be the Chairman of another company that also uses the name of Midas. One of the two other brothers of the CEO of Midas (Pvt) Limited owns a third Midas-related company which is said to be completely separate from Midas (Pvt) Limited and he states that, in fact, there is direct competition between the two firms owned by the two brothers. Numerous statements and documents supporting opposite views about the role of Midas (Pvt) Limited have been provided to the Commission and are given at Annexure-16.
To remove widespread misgivings as also to clear the name and reputation of persons and firms that may be innocent of allegations, the Commission is of the opinion that this particular instance should be investigated through forensic audit by the relevant authorities at either NAB or any other relevant forum.
19. The Islamabad-based members of the Advertising Association of Pakistan have provided a proposed policy and procedure to achieve the aims outlined in TOR No.G, H & I. This document is already placed at Annexure-15.
20. Despite the rapid growth of electronic media in Pakistan after the year 2000, there is no defined policy of the Federal Government or of the four Provincial Governments to determine a fair, objective basis for the allocation of Government advertising to TV channels and FM radio stations. In view of the substantial sums of billions of rupees per annum spent by Government entities on advertising in electronic media, this complete absence of a written policy and the non-existence of any mechanism in Government similar to the ABC for print media, to establish an objective basis for the selection of electronic media is inexplicable and unjustified. It represents a gross failure to respond to fundamental changes in the media and advertising landscape of Pakistan onwards of the year 2000.
This lacuna is made all the more strange when it is noted that, whereas the rates for Government advertising in print media are lower than rates for private sector advertising, in the case of TV channels, the rates charged for Government advertising are far higher than the rates charged for private sector advertising. The mystery is compounded by non-transparency on the part of electronic media whereby rates charged for advertising have not been placed on a website that is accessible to the public. PBA has assured the Commission that it intends to place all data regarding rates on its website and the Commission welcomes this initiative and awaits its fulfillment because this would enable Government to formulate a policy for allocation of Government-controlled advertising to electronic media on the basis of transparency and equity.
21. We have so far dealt with two out of the three questions that arise from TOR No.G as stated in Para No.1 of this section. Let us now consider the third question i.e. “Is there scope for public money to be used arbitrarily (and, possibly also secretly) to favour particular channels, journalists or media houses?”
22. Taking into account all the written and verbal statements made to the commission, the basic answer to this question, regrettably, has to be in the affirmative. Yes, notwithstanding the existence of a written policy for the allocation of Government advertising to print media, and despite Government entities stating that they base their selection of electronic media on the TV audience-measurement system used by the advertising and media sectors of the country; subtle as well as crude methods are used to favour particular TV channels and media houses as well as to discriminate against particular TV channels and media houses when those in public office wish to use such powers.
23. As regards journalists, it is already a matter of public record that some part of the secret funds available to the Ministry of Information and Broadcasting has been given to particular journalists. In responding to the directives of the Hon’ble Court, in April 2013, the names of some of these journalists have been published. Names of some other recipients of amounts from the secret funds have been withheld.
24. The Ministry of Information & Broadcasting is not the only source for the use of secret funds in the media sector. As submitted to the Supreme Court by the Director-General of Audit in May 2013, secret funds are available with several other Ministries and Departments, civil and military intelligence agencies to be used, as per requirements, to benefit chosen recipients who may include certain journalists and private media houses in order to promote objectives of covert official policies.
25. During the disclosure of the names of recipients of amounts from the secret funds of the Ministry of Information & Broadcasting, in addition to the names of individual journalists, the list also included the name of a leading TV channel which, it was stated, was given a certain amount to produce and project a programme on positive features of Pakistan. While any such secretor covert payments are undesirable and unfair to all other media, the occurrence of this act can perhaps be explained by the fact that the overwhelming part of content in news media, specially TV channels, tends to be critical of the Government-of-the-day and focuses on the grievances of the public while tending to completely ignore a few but genuinely positive accomplishments of the Government-of-the-day. The attempt to correct this severe imbalance of bad news with merely one programme on a TV channel or a series of such programmers is not justifiable as the selection of the channel to be the beneficiary of public funds was done in a secretive, non-transparent manner.

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